CAHYA MATA SARAWAK ANNUAL REPORT 2016

185 Cahya Mata Sarawak Berhad A N N U A L R E P O R T 2 0 1 6 Section 07 Financial StatementS NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2016 41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT'D.) (a) Credit risk (cont'd.) (i) Receivables • Risk management objectives, policies and process for managing the risk The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant. It is the Group’s policy that contractual deposits are collected and scheduled progress payments are received from the buyers when due. Titles to properties are only transferred upon full settlement. Management does not expect any counterparties to fail to meet their obligations. • Exposure to credit risk, credit quality and collateral At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statements of financial position. Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 90 days, which are deemed to have higher credit risk, are monitored individually. The Group receives financial guarantees given by banks, shareholders or directors of customers in managing exposure to credit risks. At the end of the reporting period, financial guarantees received by the Group amounted to RM41,580,481 (2015: RM44,188,412) in respect of RM52,408,090 (2015: RM51,759,527) trade receivables. The remaining balance of trade receivables are not secured by any collateral or supported by any other credit enhancements. Information regarding financial assets that are either past due or impaired and ageing analysis is disclosed in Note 24. Management believes that no additional credit risk beyond that provided for is inherent in the Group’s trade and other receivables.   (ii) Financial guarantees • Risk management objectives, policies and process for managing the risk The Company provides unsecured financial guarantees to banks and a third party for banking and other facilities granted to associates. The Company monitors on an ongoing basis the results of the associates and repayments made by the associates. • Exposure to credit risk, credit quality and collateral The maximum exposure to credit risk relates to unsecured corporate guarantees given to banks for banking facilities granted to an associate as disclosed in Note 38. As at the end of the reporting period, there was no indication that there would be an event of default on repayment in relation to the associate.